​How Meniga is Leading the Charge in Revolutionizing Online Banking

Joel Anderson  |

The banking industry doesn’t exactly have a tremendous reputation for customer service over the years. If nothing else, the limited hours of availability have long made a trip to the bank akin to pulling teeth. However, the digital age has done a lot to mitigate this classically tempestuous relationship.

Today, most banks provide the option to do most of our banking online, something that has opened the process up in ways unimaginable a mere two decades ago. However, even in undergoing this tremendous change, there’s still an enormous distance to go before banks will be viewed as existing on the cutting edge of catering to their customers.

That consideration is part of what drives Georg Ludviksson, the co-founder and CEO of Meniga. Meniga works with banks to help them design online banking platforms that are specifically geared towards making the practice of managing your money as seamless and efficient as possible.

“I’m passionate about innovation on the intersection of finance and technology, and particularly always interested in personal finance,” says Ludviksson. “I was the guy helping friends and family with money issues. When I moved back to Europe, I had this idea to start a European company focused on personal finance management.”

And in focusing on how banks interface with their customers, Ludviksson was delving into an area that was ripe for disruption and improvement.

“Traditional retail banking business models focused on just interest rate differentials and fees, so there's so much opportunity if you're able to give your users a delightful experience, and generally speaking, most banks have not been good at that,” says Ludviksson. “Most digital banks are not very personalized, let alone inspiring. They’re very far behind the best mobile app experiences out there, and they’re looking to change that.”

Finding Opportunity in Iceland’s Economic Collapse

Interestingly enough, the genesis of Meniga came during a time when the banking industry was at a low point, March of 2009, in a place where the failure of the banking industry was especially pronounced, Iceland.

“When I moved back to my native Iceland back in 2008, it coincided with the financial crisis,” says Ludviksson. “In some ways that was a blessing, because we got a lot of the early talent from the fallen Icelandic Banks. Our CTO and my co-founder, Asgeir Orn Asgersson, was leading the development of Iceland's largest online bank at that time, but it wasn’t fun or cool to work for these bankrupt banks anymore. I convinced him to join me with this project, then we also got early customers in the recapitalized Icelandic banks that were under pressure to give relief to households that had seen a big drop in purchasing power at the time.”

Given the time and place, working with the banks wasn’t necessarily an obvious decision. However, Ludviksson and Meniga saw early on that one of the best ways to reach people was by partnering with those institutions that had the largest customer base.

“There were a few early decisions we made, one was to work closely with banks,” Ludviksson continues. “In hindsight, it was a good decision for us. It was the way that we would reach the most people and scale. A lot has happened since then, but now I think it's never been a more interesting time to be working with banks to build their digital channels and strategies. There are so many disrupting factors and interesting things happening in that world, it's a very interesting situation.”

From those early days in Iceland, Meniga has managed to expand its footprint to the rest of Europe and beyond.

“We are early movers in Europe and, we got early customers in the Icelandic banks. Then we moved on to medium sized Scandinavian banks and then gradually to the top tier banks in Europe and beyond. Now we are one of maybe two globally leading companies in the world that is kind of providing digital banking components to weaker banks.”

A Focus on Mass Appeal

The driving principle at the core of Meniga’s services is that getting people to engage more consistently with their finances helps them to better understand their financial lives. The struggles with budgeting and saving that so many people have are actually a much more addressable problem than they seem. Unfortunately, the sort of customer engagement that might allow people to more effectively understand their finances or budget is elusive when the online platforms they’re using come up lacking.

“One of the reasons we have been relatively successful in this space is that our focus is always on mass appeal, trying to lower the threshold as much as possible” says Ludviksson. “That means looking past the older generation of relatively dull budgeting or accounting solutions and trying to use psychology, humor, social curiosity, and some smart behavioral psychology things to get people to think about their money or nudge them in the right direction without being kind of overly square in that sense. There’s definitely a market for that. There’s a minority that wants just great budgeting solutions, people that have high financial literacy and motivation to use them, but the majority of people need a different type of solution.”

Making the act of tracking your spending and managing financial information something that’s actually engaging and interesting can have a tremendous effect on users.

“One of our main concepts is what we call the financial activity feed,” says Ludviksson. “You can think of it as Facebook (FB) for your finances. It’s not like Facebook in the sense that it's social, it’s like Facebook in the sense that it's a timeline feed telling you the story of your finances as they unfold. Part of that is showing you every transaction you make. But more importantly, it's interpreting your finances as they happen, summarizing, giving you weekly and monthly summaries, telling you if you're spending more or less than usual in certain categories, nudging you about setting a spending limit, and telling you if you're spending more than your peers or people with the same income bracket or in the same zip code. Even if you don’t want to set a budget or goal, it's still interesting enough for almost everyone to just think about your money more often than if you just log in to your online bank once or twice a month. That is one of the concepts that we have pioneered, and now we are working with many of our customers to implement mobile banking experiences and make that one of the core functions. It’s a very different user experience and interface than the typical, transactional nature of online and mobile banking today. It can increase engagement from one to five times a month to three to 20 times a week, and in many cases more than once daily.”

That engagement is no small thing. Higher levels of customer engagement have clear and direct correlations to budgeting better and saving more. What’s more, it opens up avenues for much more targeted and effective methods of direct marketing. With detailed data about financial transaction, banks can tailor experiences directly to users in a way that’s more useful for customers and more effective for marketers.

“If you get people to engage with the service every day, you also learn much more about them,” Ludviksson continues. “It’s about a great user experience. It’s also about building a great data platform, about understanding people's financial situation and behavior and then using that data broadly to better recommend new products and services. That is a big opportunity for banks or whoever who does that. One of the benefits of working with banks if you do that is if you're successful you immediately have scale as opposed to if you're starting a straight to consumer application or service. We may reach for example banks that have combined close to 50 million online banking users.”

Helping Customers Make the Most of Their Money

Georg Ludviksson’s vision for a world where people don’t struggle to understand their finances is a bold one. However, by pairing with some of the world’s largest banks, he’s putting his company that much closer to its ultimate goal.

“I have deep interest in psychology of personal financial behavior and responsible financial behavior,” Ludviksson says. “I truly believe it is one of the big topics of our time. People are saving less than they would like, and I think there's a big opportunity there. With solutions that motivate people to think about what really matters, we can help them be smarter consumers and build products and offer advice to help people, which is a win-win. That has always been our business model, selling software to banks so that they can help their customers understand their money and make the most of it.”

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.


Symbol Last Price Change % Change